Playboy Bought Yandy For $13.1M In 2019

Playboy acquired Yandy for $13.1 million on December 31, 2019. The deal included “substantially all of the assets and liabilities, excluding outstanding borrowings.”

For the year ended December 31, 2019, Yandy recorded a net loss of $19.8 million on sales of $43.1 million, and in 2018 a net loss of $951,351 on sales of $42.4 million.

This and other information was reported earlier this year by Mountain Crest Acquisition Corp, which recently merged with Playboy, allowing the latter to again become a publicly traded company.

The filing noted that a significant portion of Yandy’s 2019 loss came from an accounting move that recorded a $15.8 million “impairment to goodwill” to the company, since the acquisition of Yandy at the end of 2019 “was a bargain purchase.”

Yandy, which had long been seeking a buyer, had been burdened by debt. As of the end of 2019, the filing shows, Yandy had $18.8 million in long term debt and annual interest expense alone of $2.7 million.

For the nine months ended September 30, 2020, Yandy, now a part of Playboy, had net income of $2.260 million on net revenues of ​$40.239 million.

Playboy itself reported net revenues, exclusive of Yandy, of $78.11 million for the year ended December 31, 2019. With Yandy included, the combined entity reported a loss of $21.2 million on sales of $121.2 million for 2019.

For the nine months ended September 30, 2020, Playboy, now incorporating Yandy, reported a loss of $4.759 million on combined revenue of $101.335 million. Long term debt as of that date was $156.2 million.

The filing revealed Playboy’s heavy reliance on renting its famous brand name. For example, of its $78.1 million in revenue (independent of Yandy) for the year ended December 31, 2019, $53.7 million came from trademark licensing. Magazine and digital subscriptions provided $10.4 million and TV and cable programming another 13.3 million.

The company explained it now “has over $400 million in cash flows contracted through 2029,” and added, “our licensing revenues are concentrated with a limited number of licensees and retail partners. For instance, the five largest license agreements in our consumer brands licensing business comprised 34% of consolidated revenues in the nine months ended September 30, 2020, and the largest contributed 16% of consolidated revenues during that period.” It added, “In China, where Playboy has spent more than 25 years building its business, our licensees have an enormous footprint of nearly 2,500 brick and mortar stores and 1,000 ecommerce stores selling high quality, Playboy-branded men’s casual wear, shoes/footwear, sleepwear, swimwear, formal suits, leather and non-leather goods, sweaters, active wear, and accessories.”

The filing continued, “however, as a result of this success, the percentage of total net revenue attributable to China licensing had become 44.4% of Playboy’s total revenue by the end of 2019. With the acquisition of Yandy and the ramp up of North American consumer product sales, that percentage had already reduced to 28% for the nine months ended September 30, 2020, in spite of even higher China licensing revenues, and Playboy expects it will continue to become a smaller percentage of total net revenue in the future as North American consumer product sales, largely through direct-to-consumer channels, accelerates.”

Playboy stated its other current revenue sources include “sexual wellness products available for sale online and in over 10,000 major retail stores in the US, and a growing variety of clothing and branded lifestyle and digital gaming products.”

Yandy, which operates solely online, and is headquartered in Phoenix, offers women’s lingerie, costumes, swimwear and other apparel. According to Playboy, “Yandy has curated a catalog with over 20,000 products from more than 100 brands and sells products to customers worldwide. The primary drivers for the acquisition were to leverage Yandy’s e-commerce capabilities, attractive brand positioning and customer database.” — NM

The 400 page SEC filing, which includes the proxy statement, financials and other documents can be found here: https://www.sec.gov/Archives/edgar/data/1803914/000110465921005986/tm2034213-12_defm14a.htm